COREP - FINREP - XBRL SGCB COREP - FINREP Implementation in France : first lessons 16th International XBRL Conference Vancouver, 5 December 2007 Jean-Luc

COREP - FINREP - XBRLSGCB

COREP - FINREPImplementation in France : first

lessons

16th International XBRL Conference

Vancouver, 5 December 2007

Jean-Luc MENDADeputy Director, Policy and Research

Secrétariat général de la Commission bancaire



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COREP - FINREPImplementation in France : first lessons

1 • Project objectives : a european

framework

2 • The French Banking Commission

COREP - FINREP project

3 • First lessons… and the way forward


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1. Project objectives : a european framework

What are CEBS’ missions ?

• Advise the European Commission on banking policy issues, in particular for the preparation of draft measures for the implementation of EU legislation

• Foster consistent day to day implementation and application of Community legislation by issuing guidelines, recommendations and standards

• Promote supervisory cooperation and provide for the exchange of supervisory information


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• In 2005, CEBS decided to recommend the use of the XBRL standard in order to implement new common reportings, COREP and FINREP :

COREP (COmmon REPorting) : implementation of Basel 2 in the banking sector

FINREP (FINancial REPorting) : prudential reporting resulting from the implementation of IFRS standards

• Main objectives of CEBS :

– Harmonising banking supervision practices in Europe, end developing a common supervisory culture

– Reducing unnecessary costs of reporting to the banking supervisors through European convergence



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• XBRL taxonomies built by the CEBS for COREP and FINREP create a common framework. They include :

– A common vocabulary for European supervisors, elaborated on the basis of official European regulations and

– A common « grammar » through its « Linkbases ».

• XBRL allows for a european flexible approach, including national specific elements

• XBRL standard has also allowed to implement complex reportings such as COREP and FINREP in a very tight time frame



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COREP 13 january 2006 : COREP reporting framework released by CEBS =>

http://www.c-ebs.org/standards.htm

1st half 2006 : consultative period on the French framework with professional associations

28 juin 2006 : COREP provisions examined by the Commission bancaire.

FINREP 16 december 2005 : FINREP reporting framework released by CEBS

=> http://www.c-ebs.org/standards.htm

Start of the consultative period on the French framework with professional associations

28 june 2006 : Instruction n°2006-04 adopted by the Commission bancaire



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COREP and FINREP taxonomies COREP => european taxonomy available on 20 september 2006

COREP => French first version fr discussion (0.1) published on 1st december 2006

- version 0.2 on 15 january 2007

- approved version 1.0 published on 5 february 2007

http://inbdf/fr/supervi/supervi_banc/reporting/corep.htm

FINREP => european taxonomy available on 6 october 2006

FINREP => French first version for discussion (0.1) published on 26 october 2006

- version 0.2 on 15 january 2007

- approved version 1.0 published on 5 february 2007

http://inbdf/fr/supervi/supervi_banc/reporting/finrep.htm



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Taxonomy editing tool delivery, getting started

and training

T

A

X

O

N

O

M

Y

First draftEuropean taxonomies 01/2006

Launch

Taxonomy extensions

Final version european Taxonomies & Beginning of French taxonomies09/2006

French taxonomy definitions Validated

taxonomies

Taxonomiesavailable for theprofessional public10/2006

02/2007

Project management and supervision

Taxonomy finalization

Professional’s Feed back


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2 • The French Banking Commission COREP - FINREP project

• The French Banking Commission decided to make it mandatory for the banks to transmit their COREP and FINREP reports, using the XBRL standard for reasons of efficiency and cost.

• The working relationship between banks and the BC will change only marginally :

The General Secretary of the Banking Commission has provided the banks with the adapted French version of the European taxonomies

The financial institutions will transmit their reports (instance documents according to XBRL vocabulary) XML/XBRL, via the usual data transmission means

After verification of data quality, anomalies will be restituted to each institution


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• In a first stage, need to run two parallel information systems : COFINREP and BAFI

• Possible since : Relatively few common data between the new reportings

and the present data base

COREP and FINREP are new and would have, in any case, needed important and complex developments in the old system

This situation will not hinder the supervisors’ work

• However, we will need to run data exchanges between both systems


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FinancialInstitution

Information System

Prudential and accounting Reporting

Bâle II

IFRS

COREP Instances

FINREP Instances

SIGNECB

Insideapplications

CB/BDFAccreditation

Input Output

Civil statuts data

Configuration

Accreditation

DataControl

andmanagement

Datamining

XBRLTaxonomy management

BAFI

COFINREP


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• Banking Commission decided to create and manage in-house the French versions of COREP and FINREP taxonomies

• COREP: about 800 entities concerned19 templates and about 23 000 data (facts)

• FINREP: about 100 entities concerned

42 tables (27 templates ) about 1 700 data

• Final users : 300 supervisors and inspectors

• Team of 4 taxonomy managers


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SCOPE

– French taxonomies management (VERSIONING)

– Data reception management

– Digital signature of the instance documents

– Authorisations and reference data management

– Controls of received instances

– Reminders in case of anomalies or late data transmission

– Synthesis and reporting according to the needs of the supervisors

– Interface with the others systems of BDF

– Automatisation of the processes

PORTAL

V1 P

ORTAL

V2


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Global conception

Launch

06/2006

Portal V.1

Project management and supervision

Validation

07/2006

Go livePortal V1

Go livePortal V2

P

O

R

T

A

L

Portal V.2

01/200806/2007


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• Choice of a generic software :– very short deadlines– use XBRL as far as possible

• Legal process for open tender :– Open tender : 7 december 2005– Emission of specifications : 3 february 2006– Choice of solution : may 2006

• Chosen software meets 40% of users’ requirements in the basic version

• 60% of specific developments taken in charge by the supplier

• Supplier team (5 to 10 people), internal IT team (4 to 6)


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- Taxonomy published

- Intances workflow

- Taxonomy creation

- Instance management InstanceDocument

BACKEND

Taxonomy

Financials institutions (submitters)

Databasesservers

Corporate Directory Server: BAFI …

InstanceDocument

InstanceDocument

InstanceDocument

InstanceDocument

Receipt Management

Reception ManagementTaxonomies

INTRANETEXTRANET

Taxonomy control

TaxonomyMistakes/Errors

Taxonomy management Control and

storageAmounts ctrl.

BAFI/COFINREPComparision

Reporting synthesis

• Conception• Reporting

calculation

ReportingExtraction

COFINREPReportingErrors

Reporting synthesisReference data management

Habilitations

Taxonomy

InstanceDocument



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FIRST OVERALL POSITIVE JUDGMENT

• In terms of project implementation :

– XBRL has allowed to realize the core functionalities within a very tight time frame (only one year including the development of the French versions of COREP and FINREP)

– Internet-based technology allows a more user friendly approach

• We started receiving end- June COREP and FINREP reports. Up to now, very encouraging elements :

– Over 80 % of required reports were sent before the deadline– Limited number of technical mistakes, most of them due to the

simultaneous implementation of digital signature, and tolerance on decimals

– No real problem with XBRL specifications, including dimensions


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MAIN CHALLENGES…(1)

• Dealing with very complex taxonomies, using dimensions extensively (new standard 1.0 created for COREP)

• Need to develop “best practices” for taxonomy development

• Too little softwares, in particular taxonomy editors, are fully compatible with all XBRL specifications, especially with dimensions 1.0

• Some taxonomy editors still lack user friendly approach to taxonomy validation


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• The question of “versioning” management is very important, and we welcome the upcoming issue of a new specification for discussion. Within the CEBS working group, Banque de France has contributed, with others, to this result.

• Beyond the identification of changes between different versions, we should be careful that modifications in taxonomies, for instance changes in namespaces, and resulting changes in element technical names, have only limited impact on existing mappings between internal systems and taxonomies. Otherwise, this could reveal cumbersome and costly.

• This is all the more important that COREP and FINREP (especially COREP) are very large and complex taxonomies. A major advantage of XBRL, which is to lower the cost of evolutions, could be hindered.


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• Lack of formulae standard has had a significant impact on the project, since it made it compulsory to develop a great number of in-house business rules.

• As a consequence, the choice of a software solution has revealed until now less of an advantage than should be the case. Indeed, we had to perform 60 % of specific developments, instead of 40 % as planned in the beginning

• But we are confident that with the finalization of the Formulae specification, this can be restored.

• Another consequence is that these specific business rules cannot be shared with credit institutions in order for them to perform the necessary internal controls.


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MORE CHALLENGES…(4)

• The Commission bancaire decided not only to receive data, using the XBRL standard, but also to store the data in XBRL files, and to manipulate the data with XBRL tools. We believe to be among the very few to have taken this orientation, instead of the more traditional approach consisting in storing the data in traditional databases.

• This is all the more challenging that existing tools have to be improved in order to benefit from one of XBRL advantage, that is to say less costly evolutions. We believe indeed that it is necessary to develop adapted tools, able to manipulate the data, keeping and using extensively the notion of “dimension”.

• We hope that software companies will respond to this important need in the future.


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THE WAY FORWARD

• COREP-FINREP is the decisive step in the rebuilding of Banque de France entire information system of data collection from financial institutions

• The second stage has just started with a new project concerning the modernization and automation of financial institution identity data

• Lastly we have just launched a new project to achieve the

complete change of our data collection system. The name of the project is SURFI in French, for Financial Institutions Unified Reporting System.

• In 2010, all data from financial institutions will be collected, using the XBRL standard.


QUESTIONS ?

Secrétariat général de la Commission bancaire

SGCB

Documents

COREP - FINREP - XBRL SGCB COREP - FINREP Implementation in France : first lessons 16th International XBRL Conference Vancouver, 5 December 2007 Jean-Luc